Get Organized

To get started, gather everything you'll need to balance the books. The easiest way to do this is online - you'll just need your computer and account information. There are several templates and spreadsheets available to help.

Start by writing your month-end account balance from the bank statement on your piece of paper next to the phrase "Bank Balance".

Compare your Check Register to your Statement

Look through every item on your check register, and make sure it includes everything from your bank statement. Place a small checkmark next to matching items (put the checkmarks on both the bank statement and the check register).

If anything is missing from your check register, add it (unless you think it's a bank mistake, of course). This includes ATM fees, overdraft fees, interest you've earned, and so on. If anything looks funny, write the date and amount at the bottom of your piece of paper so you remember to research it.

Add up all the deposits and withdrawals so you know how much you think you should have.

Find Outstanding Transactions

Next, look through your check register for any transaction that does not have a checkmark next to it. These transactions are items that did not appear on your bank statement - otherwise you would have checked them off.

Most likely, these are outstanding checks. Outstanding checks are checks that you have written to somebody, but they have not deposited (or the outstanding check didn't make it's way through the banking system by the time your statement was printed).

Add all of the outstanding deposits (direct deposit from your payroll, deposits that you mailed to the bank but which have not appeared yet, etc). Write this number on your sheet of paper next to "Deposits".

Then add up all outstanding withdrawals (outstanding checks you've written, automatic electronic withdrawals that you know have happened since the statement was printed, etc). Write this number on your sheet of paper next to "Withdrawals".

Run the Numbers

You've got several numbers on your sheet of paper. Now let's work with 'em.

Using your calculator, perform the following:

Start with zero

Add "Bank Balance"

Add "Deposits"

Subtract "Withdrawals"

The result should be the exact amount you show in your check register.

02

Fix Mistakes and Problems

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If the numbers don't match, you need to figure out why. If you find fraud or a bank error, contact the bank immediately - otherwise you might have to live with the problem.

Fortunately, errors and fraud are relatively rare. In most cases, the numbers won't match because of:

Arithmetic mistakes

You missed a fee or interest payment

Transposed numbers or "fat fingers" (345 becomes 354)

03

Get a Head Start

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The key to staying balanced is making it easy on yourself. That means finding a way to get information in a way you'll use it, and being able to hit the ground running. If you have to spend time every month getting reacquainted with the process and preparing everything, you're less likely to balance your checkbook.

There's no best way to do this, so figure out what works for you. If you want to use paper, that's fine. Want to build a spreadsheet? Great.

It's also nice to know about transactions as they occur, which can reduce the amount of time you spend researching each month. Set up text alerts on your bank account so that know when big electronic withdrawals hit (they'll be fresh in your mind when it comes time to balance the books). Alerts also make it easier to detect fraud and errors, which can save you time.